Birgit Kuester February 25, 2020 Mutual Fund
Taxes are often overlooked and can substantially reduce your after-tax gain unless investing within a tax-deferred, retirement account. Avoid funds with large distributions (capital gain payments) by searching for funds with low turnover. Since buying and selling stock incurs transaction costs, lower turnover translates to lower expenses and lower capital gains taxes. Fund managers who seek to boost returns through repeatedly buying and selling securities are no friend of yours.
Ask you financial adviser to show you the fund ratings or do your own research if they will not. Otherwise find yourself a good Fee-Only financial adviser that gets paid to provide you with these top fund choices and help you invest in the "best of the best" no-load funds without any conflicts of interest.
Because these funds are not actively managed, you cannot weed out under-performing securities from the overall index. This can and does have a detrimental effect on your returns. If market conditions warrant action, index funds usually will not be altered unless it happens to coincide with their regular re-balancing schedule.
In his book "The Trouble With Mutual Funds," Richard Rutner shares that "No one denies that the average mutual fund returns 2% less per year than the stock market returns in general. Yet the mutual fund industry spends billions of shareholder dollars to promote its money managers as experts who can manage investor`s dollars with skill. The vast majority of mutual funds (94% according to a recent five-year survey by Lipper Analytical Services) have underperformed the stock market as a whole."
While both managed and index funds can yield nice long-term returns over time, I have found that if you can select the best managers in their field and allocate your assets to these top 20 percent of the fund world, you can get better returns from your fund investments. But if you are not sure whether your funds are in the top group, find out. and if they are not, you might be better off with an index fund.
No one offers the idea of buying investment properties which appreciate and allow you to harvest dollars out of them by way of refinance and adjust the rents to cover your cash harvest. Once you harvest it is time to deploy and like the seasons, you can do the same cycle over and over again increasing your wealth.